Depreciation offsetting tax penalties for IRA withdrawal

[Rich Dooley]

I'm looking to invest in MF through some crowdfunding platforms. I want to take some dollars out of my IRA to do so (not doing this in a SDIRA, I have a debt investment through that). I was wondering if the tax benefits of depreciation would meaningfully offset the withdrawal penalties from the IRA. I'm fairly new at this, so hope I'm not asking a dumb question (bit if I am, what the heck, I'll learn something). Thanks for the insight.

[Michael Plaks]

@Rich Dooley

You will have income tax on the withdrawal plus, if you're under 60, a 10% penalty. Possibly the state income tax, too, depending on your state.

Income tax (both IRS and state) might be partially offset by depreciation, depending on your overall situation: total income, the amount of your IRA withdrawal and rental cash flow. The 10% penalty is not offset by anything.